Posts aboutDrinks

The UK is the most obese country in Western Europe, and the sixth most obese country in the world. Around 26.9% of the British population has a body mass index of 30 and above, according to the OECD report and the cost of treating ill health caused by obesity and related issues is rising fast, threatening the NHS budget. The government, long criticized for taking no action to tackle this issue, decided to introduce a Soft Drinks Industry Levy, in the hope that the increased cost will stop people from… Read more

A focus on China and on increasing store openings in the country has been part of the Starbucks strategy since the company felt the negative impact of recession. Prior to 2008, Starbucks had been growing rapidly in terms of store openings, revenues, and operating profit. However, this all changed as the recession hit and the company struggled to cope. As many countries around the globe fell into recession, the impact on Starbucks was strongly felt. This led to a shift in resources to growth in international markets. It was felt… Read more

Are you a punk? Are you passionate about craft beer? Are you cool with the risks of investing in a company that “started as 2 humans and 1 dog”? If you answered Yes to these questions, Brewdog has a business proposition for you. And it comes with free beer. BrewDog is one of the UK’s most successful craft breweries. James Watt and Martin Dickie began the company in 2007 using personal savings and bank loans, and second-hand equipment. Initially, their beers were bottled by hand and sold at local markets…. Read more

Discount supermarket Aldi reported a 65% jump in pre-tax profits in September 2014. More than 95% of Aldi’s products are own label, but many of its products lack direct reference to the retailer. As discussed in the MarketLine case study, Supermarket private labels: growth following economic downturn; market share for retailer brands has increased rapidly over the years, most notably in the UK, Spain, Germany, Italy and the Netherlands. After years of consistent market share increases, private label now has its strongest competitive position ever. Of particular interest is the… Read more

The global halal market, which includes products and services complying with Islamic laws and regulations, was valued at $1.7tn in 2012, growing faster than other consumer markets despite the recent global recession. At a time when many Western markets are reaching their saturation point, Muslim consumers are becoming a target audience, and the halal market is emerging as one of the fastest growing consumer segments in the world. Despite the common belief that the term “halal” is limited to meat and poultry, opportunities in the halal market go way beyond… Read more

In recent years, Starbucks has embarked on a growth strategy known as the ‘accelerated growth plan’ in an effort to grow the business. A key part of this initiative, as discussed in the case study ‘Starbucks Corporation: Accelerated Growth Plan’ , has been the expansion of in-store offerings beyond coffee. In order to aid this expansion Starbucks made a number of acquisitions, namely of Evolution Fresh, La Boulange, and Teavana. Following the purchase of Evolution Fresh in late 2011, the company set out aggressive growth plans with the plan being… Read more

Suntory’s surprise $16bn acquisition of American spirits manufacturer Beam Inc., one of the largest outbound deals in Japanese history, catapulted the company from a relatively obscure food and beverage company to the third largest premium spirits company in the world. Announced in January 2014, the deal took the industry by surprise. However, faced with a shrinking domestic market, the acquisition was a culmination of Suntory’s efforts to expand its foreign operations after large-scale takeovers of Frucor and Orangina Schweppes in 2009, and Lucozade and Ribena in 2013. Furthermore, the company… Read more

The British government is to introduce a new statutory code that will give publicans a “fairer deal” after a Campaign for Real Ale (CAMRA) survey concluded that 57% of landlords in tied tenancies earned less than a National Minimum Wage equivalent salary of £10,000 a year. The reforms on the current laws means that tied tenants will be able to request a rent review if they have not had one for 5 years and also be given access to the information the pub owning companies have used to calculate increases… Read more

With a market share of 11.3%, Nestlé is the second biggest player in the global consumer packaged coffee market. The company is not satisfied sitting second to Mondelez International (15.7%) and is implementing market segmentation strategies aimed at making it the undisputed market leader. Nestlé’s offering at the lower, instant end of the market revolves around the highly popular Nescafé brand which, according to the company, is the most-consumed coffee in the world. In recent years, the company has grown this brand and launched new products, most noticeably the Nescafé… Read more

Craft brewers are small, independent, and traditional. Craft brewers have an annual production of less than 6 million barrels of beer or fewer, have less than 25% owned by a non-craft brewer, and use adjuncts to enhance rather than lighten flavor, or at least 50% of their products brewed by volume are malt beers. The US craft beer industry has surged since the late noughties. Worth an estimated $10.2bn in 2012, the craft beer industry far outgrew the overall beer industry. While craft beer sales grew by 15% by volume… Read more

Although the rumors of a potential acquisition of SodaStream International Ltd. (SodaStream) by PepsiCo, Inc. (Pepsi) have recently been denied, the company remains a threat to both Pepsi and fellow soda incumbent The Coca-Cola Company (Coca-Cola). Crucially, it still has the potential to further disrupt the soda market through its challenge to traditional distribution models and enhancing consumer choice. However, the company’s razor/razorblade business model remains at odds with its competitors’, and would not have played well into either Pepsi or Coca-Cola’s long-term strategy. SodaStream’s focus on the environmentally friendly… Read more

My colleague Nick Wyatt’s recent MarketLine blog paints a sombre picture of the UK high street, with bricks-and-mortar retail hit hard by the rise of online shopping and lack of consumer confidence. However, some high street outlets are experiencing a more positive performance: coffee shops, for example. The UK coffee shop sector has seen strong expansion in revenue and outlet volume for several years. Chief beneficiary of this trend has been Costa, currently the largest branded chain in the UK as measured by the number of outlets. It’s been around… Read more

Although the UK RTD (ready to drink) sector is in long-term decline, Diageo has been innovating with a new range of canned premixed ready to drink spirit and mixer serves. Trading heavily on their low-entry price points and convenience credentials, this article looks at Diageo’s stable of premix alcoholic beverages, and the Smirnoff and Cola SKU in particular, and examines how they have created a distinct segment in the UK alcoholic beverages market. Convenience is not as big a consumer pull in alcohol as in other areas of CPG, such… Read more

Amid the economic downturn, price has become the key issue in the UK alcohol market with consumers turning to the off-trade where prices are lower and, in doing so, trading down to cheaper brands. The brands that have performed well in the UK wine category are those aligned with consumers’ ‘recessionary mindset’. This article explores one such brand, FirstCape—a South African wine brand—and determines that it has been successful by taking its marketing cues from the wider CPG arena in developing promotions, product tiering, branding, range, and pack sizes and… Read more

With declining beer volumes throughout Europe, brewers have looked at diversifying their product portfolios and seek out new revenue streams from alcohol categories adjacent to beer. Carlsberg, one of the world largest brewers, has expanded its product portfolio with the addition of the Somersby cider brand. The brand, which was first launched in Denmark and Norway in 2008, is now available throughout northern Europe and Belgium and has most recently been launched in Croatia and, most significantly, Russia. Somersby cider is an example of a successful premium product launch outside… Read more

Coconut water has experienced a lot of initial success in the US due to its unique taste profile and sports nutrition benefits. Now is a pivotal time to further consolidate and grow the market, lest it be dismissed as just another â€˜fadâ€™ category. The myriad of health benefits associated with consumption means that a natural positioning for coconut water has been a healthier alternative to sports nutrition drinks. This has particular appeal to athletes who have become reticent in recent times to consume some of the more commercially popular sports… Read more

Amid data showing that the craft beer sub-sector has posted strong growth in an otherwise dismal US beer category, brewer MillerCoors has pooled all its craft-style domestic and international brands into a new craft-focused division called Tenth and Blake. The UK real ale sub-sector is also showing positive growth in a poor overall environment. The success of craft beer has arisen as it dovetails with various important consumer trends: it fits with the general trend towards trading up; it capitalizes on desires to purchase authentic products; it goes with the… Read more

Amid a dwindling UK juice and smoothie category, Cherrygood, the UK’s first ready-to-drink cherry juice, has achieved notable market success following its launch in 2009. In its first year of operation the brand reported a turnover of £1.2m. This article will examine how Cherrygood’s unique product attributes and brand marketing have enabled it to form a point of differentiation within the UK juice and smoothie category and in so doing buck the category’s declining trend. The UK juice and smoothie category has fallen foul of cost-conscious consumers following the recession… Read more

Rising wealth among Chinese consumers has driven the market for luxury goods. While premium imported spirits have status-symbol appeal, they are also faced with strong competition from both within and outside the category. This article looks at opportunities for international spirits manufacturers in China, and the issues that need to be addressed when strategizing market entry and/or expansion. China is a key growth market for virtually all consumer packaged goods (CPG) categories, as the sheer size and spending power of the market is difficult to ignore. For premium spirits, the… Read more

Amid volume declines in spirits generally, Gruppo Campari’s Aperol brand has achieved dramatic growth since 2004, with total sales quadrupling off the back of expansion both throughout its core Italian market and into Austria and Germany. This article examines how the Aperol brand has managed to achieve strong resonance among a geographically widening range of consumers despite its focus on the premium and on-trade aspects of the alcohol market in the middle of the global economic downturn. The Aperol brand has been one of the most notable success stories in… Read more

Brazil is the world’s largest orange grower and orange juice producer and three out of five glasses of orange juice consumed in the world are produced in Brazil. While the country has achieved a leading position in the global market due to its long history of research and investments, it is now facing the challenge of decreasing consumption rates in the most important international consumer markets for Brazilian orange juice. This article examine the reasons why consumers are replacing orange juice with other types of beverages, and what strategies need… Read more

JD Wetherspoon has called for “tax parity” with British supermarkets citing that the large supermarkets benefit better from the current tax system than pubs. Now, a business calling for tax parity, i.e. equal treatment fiscally, with reasons for doing so limited to the same reasons any other business can give, i.e. inflation, can only be solipsistic. For it is not just JD Wetherspoon and their 800 or so pubs which suffer from a decline in the value of the £, or currently surging inflation, but all other actors in the… Read more

McDonald’s Corporation is one of the world’s largest food service retailing chains. The company is primarily known for its burgers and fries, which it sells through more than 32,000 restaurants in 117 countries. In 2010, the company served an average of 64 million customers per day. It primarily operates in Europe, Asia Pacific, and the Americas. The company is headquartered in Oak Brook, Illinois and employs about 400,000 people. McDonald’s has been able to successfully increase revenues and profits in recent years in spite of much negative publicity and an… Read more

Benecol is a brand licensed by Finnish company, Raisio Group. Branded products include a range of cholesterol-lowering food goods such as fat spreads, yogurts, milk, bread, and soy drinks. Benecol has become one of the market leaders in cholesterol-reducing foods. Benecol was developed after Raisio Group was approached by a Finnish university, which was looking into the use of plant stanols, a class of compounds derived from the phytosterols found in many plants, as a way to combat high cholesterol levels amongst the Finnish population. Benecol margarine was introduced to… Read more

Despite tough economic conditions, there is still demand for pricy, luxurious brands and sophisticated packaging in the wines and spirits market. When disposable incomes are shrinking, consumers in spirits sector, in mature markets, rather buy less of pricier brands, than more of cheaper labels. Demand for upmarket spirits is also created by growing of middle-classes in emerging and developing markets. Pernod Ricard, once a local alcoholic beverages producer, has rapidly expanded over the past decade, through organic growth, strategic acquisitions and powerful marketing, to become one of the world leaders… Read more